A jam-packed GAC continued on Tuesday with insights into financial inclusion, the macroeconomic picture, succession planning, AI, and more.
Read on for highlights from the day.
Takeaway: Inclusion Matters More Than Ever
Despite an early morning start, credit union leaders packed a financial inclusion roundtable from Inclusiv that focused on the growing opportunity to serve immigrant, minority, and diverse communities.
Roughly 6% of U.S. adults remain unbanked, noted Inclusiv CEO Cathy Mahon. That figure is on the decline, but that doesn’t mean they’re well-served or finding appropriate, well-priced products for their needs, she says.
That’s particularly important, noted Victor Corro, CEO of Coopera Consulting, because the United States will be a minority-majority nation within the next 10 years. Diversity is increasing with each generation, Corro said, sharing statistics on how each generation — from baby boomers through Gen Alpha — is becoming more diverse.
“Consumers expect a mix of products and services that reflect different lived experiences,” he said. “If we don’t have the products and services that reflect the various nuanced needs of consumers, we’ll become irrelevant because they’ll go somewhere else where their needs are met.”
And credit union members aren’t getting any younger. The average member age has historically been stuck in the mid- to late 40s, but Corro said that figure is now into the 50s.
“There’s no way to put that in good terms,” he said.
By contrast, he said, the average age of a Hispanic person in the United States is 28 and the average African American is 32. Credit unions must attract those demographics to grow. More importantly, the homeownership rate for those groups is 15 to 25 points below the national average, indicting a strong first-time buyer pipeline.
But, he cautioned, different generations represent different opportunities.
“The growth market for the Hispanic market may not be in recent immigrants — it may be in second- and third-generation English-preferring Hispanics,” he said. “That’s an important thing we need to understand. It really depends on your geography; if you’re in areas that are having new arrivals, this may not be your main growth engine when it comes to membership.
Protecting Minority Communities
The event also included a discussion with representatives from various groups representing minorities within the industry, including the African American Credit Union Coalition, the Native American CU Coalition, the Credit Union Women’s Leadership Alliance, National Association of Latino Credit Unions & Professionals, and the Hawaiian Asian Pacific Islander Credit Union Professionals (HAPICUP).
Those leaders’ comments centered on financial inclusion but also on more timely work protecting immigrant communities, including those other financial institutions might overlook.
Speaking for HAPICUP, Mark Volz, director of business development at CU Strategic Planning, a Callahan company, noted that Hawaiian and Asian Pacific Islanders sometimes get left out of the immigrant conversation.
“We’re immigrants too,” he said. “Our members kind of get left behind. What resources can we provide credit union professionals to feel safe within our own credit unions?”
Volz and others on the panel discussed work being done to protect immigrants and DACA recipients from being wrongly swept up in immigration crackdowns.
Takeaway: Positive Signs On Inflation
Despite widespread economic anxiety driven in part by uncertainty around trade and politics, the U.S. economy has proven surprisingly resilient, according to John C. Williams, president and CEO of the Federal Reserve Bank of New York, who spoke Tuesday morning.
The home refi boom of 2020-2021 resulted in more discretionary income for many homeowners and helped juice consumer spending, but those benefits haven’t been universal. Lower-income families continue to show signs of strain, he noted, and delinquency rates remain higher in lower-income zip codes and areas with higher unemployment rates.
Still, Williams said there are promising signs when it comes to inflation. Unemployment figures remain relatively steady, although a “low hire/low fire” job market “might be contributing to a somewhat more pessimistic environment in households than other [economic] indicators may suggest.”
Progress toward the Fed’s target of 2% inflation has stalled due to tariffs, which have “overwhelmingly” had a domestic impact, said Williams, with the full impact likely still to come. Still, inflation continues to trend downward, and Williams said he expects it to hit 2.5% sometime this year, reaching 2% by the end of 2027.
If inflation follows that path, Williams said he expects there might be further reductions in the Federal Funds rate.
Takeaway: Succession Planning Isn’t Picking A Name
New rules from the National Credit Union Administration have put succession planning in the spotlight for the industry, but one leader cautions that “succession planning” means more than just picking a name.
“If you want to really mess up your organization, decide who’s going to be the [next] CEO before the [current] CEO retires,” said Dennis Dollar, principal at Dollar Associates and a former NCUA chairman. “That’s not succession planning. Succession planning is the process we’re going to follow when that happens and who is responsible for every one of those duties in the meantime.”
A better way to think about it, he added, is a plan to understand who’s accountable for all responsibilities at the organization if someone is out for two months or more, including whether or not that departure is planned.
“Succession planning is a continuity plan, not ‘Who’s going to take John’s place when he retires in 10 years,” Dollar said.
Takeaway: AI Is Everywhere (And Growing)
It’s no secret AI is reshaping how credit unions do their work, but the industry is also grappling with shifts in how institutions think about governance and risk mitigation.
A lack of federal standards on AI governance is causing confusion related to how credit unios approach this space, said Devon Lyon, president and CEO of Central One Federal Credit Union ($835.9M, Shrewsbury, MA), speaking during a breakout session on the future of AI.
“An overall lack of federal clarity on these issues is creating essentially different levels of impact across the markets in which you’re operating,” he said. “There are certain states right next to one another [such as Colorado and Utah], your members live in both, and now you have to create two different sets of frameworks to service both.”
That’s a problem credit union leaders can solve without federal action, he said.
Compounding that problem is a patchwork of AI laws — some on the books, some still emerging — and existing privacy laws, many of which overlap, said Michael Berman, founder and CEO of Ncontracts. And those overlaps mean it’s crucial that credit unions not silo AI and privacy.
The NCUA hasn’t yet issued official guidance on Ai, but it does have internal guidance for how its own employees leverage AI, said Berman, which can help credit unions better understand how the agency uses those tools and what controls it has in place.
Although a show of hands in the audience indicated many are already using some sort of AI tools in the office, only a few raised their hands to indicate they have an internal AI data governance plan at their credit union.
“Your organization is using AI, whether it’s a strategic business decision or unregulated — and that could come up in in audits,” Lyon said.